Indian airlines on course for large upgrades

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India is expecting investment of up to $50bn in its rapidly-growing aviation sector over the next 10 years, as it upgrades ageing aircraft fleets and creaking infrastructure, said the country’s civil aviation minister.

“By 2012, the aviation sector in India will need investments of upward of $30bn, [or] $50bn in 10 years,” Praful Patel said.

Over the next seven years, $10bn will be invested in renovating Delhi and Mumbai airports. Government-owned Air India and Indian Airlines will spend $10bn on new aircraft, and private airlines will spend a similar amount on their fleets.

Air India is to buy 68 Boeing aircraft for $8bn, pending Indian cabinet approval expected this month, the long-haul carrier’s chairman and managing director V Thulsidas told the Financial Times last week.

The government has already approved plans by Indian Airlines, which flies mostly domestic routes, to buy 43 Airbus aircraft for $2.2bn.

India’s privately-run airlines are also gearing up for expansion in an era of intense competition. Kingfisher Airlines is reportedly placing an order for 53 aircraft, including 33 Airbus jets, for an estimated total of cost of $2bn.

Air Sahara is raising capital through a private share placement, the proceeds of which would be used for new aircraft as the carrier adds routes outside the country.

India’s new “open-skies” policy has permitted domestic airlines to fly on international routes that were previously the sole domain of Air India.

Mr Patel also confirmed the government would launch initial public offerings for both state-run carriers in the first quarter of next year, floating a 20 per cent stake in each.

The two national airlines have been under pressure to merge to maintain market share amid booming passenger growth and stiff competition from a host of newly-launched no-frills airlines. The IPOs would be likely to precede any such union.

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